RANPAK HOLDINGS CORP.

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RANPAK HOLDINGS CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

10/28/2021 | 09:04am EDT

Cautionary Note Regarding Forward-Looking Statements


This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Statements that are not historical facts are
forward-looking statements. Our forward-looking statements include, but are not
limited to, statements regarding our or our management team's expectations,
hopes, beliefs, intentions or strategies regarding the future. In addition, any
statements that refer to estimates, projections, forecasts or other
characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. The words "anticipate," "believe,"
"continue," "could," "estimate," "expect," "forecast," "intend," "may," "might,"
"plan," "possible," "potential," "predict," "project," "should," "would" and
similar expressions may identify forward-looking statements, but the absence of
these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Quarterly Report on Form 10-Q
are based on our current expectations and beliefs concerning future developments
and their potential effects on us taking into account information currently
available to us. There can be no assurance that future developments affecting us
will be those that we have anticipated. These forward-looking statements involve
a number of risks, uncertainties (some of which are beyond our control) or other
assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking statements.
These risks include, but are not limited to: (i) our inability to secure a
sufficient supply of paper to meet our production requirements; (ii) the impact
of the price of kraft paper on our results of operations; (iii) our reliance on
third party suppliers; (iv) the COVID-19 pandemic and associated response; (v)
the high degree of competition in the markets in which we operate; (vi) consumer
sensitivity to increases in the prices of our products; (vii) changes in
consumer preferences with respect to paper products generally; (viii) continued
consolidation in the markets in which we operate; (ix) the loss of significant
end-users of our products or a large group of such end-users; (x) our failure to
develop new products that meet our sales or margin expectations; (xi) our future
operating results fluctuating, failing to match performance or to meet
expectations; (xii) our ability to fulfill our public company obligations; and
(xiii) other risks and uncertainties indicated from time to time in filings made
with the SEC.

Should one or more of these risks or uncertainties materialize, they could cause
our actual results to differ materially from the forward-looking statements. We
are not undertaking any obligation to update or revise any forward-looking
statements whether as a result of new information, future events or otherwise.
You should not take any statement regarding past trends or activities as a
representation that the trends or activities will continue in the future.
Accordingly, you should not put undue reliance on these statements.

Management's Discussion and Analysis of Financial Condition and Results of Operations


The following discussion and analysis is intended to help the reader understand
our business, financial condition, results of operations, liquidity and capital
resources. You should read this discussion in conjunction with the sections
entitled "Risk Factors" and "Forward-Looking Statements," and our financial
statements and related notes included in this Quarterly Report on Form 10-Q as
well as the section entitled, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of Ranpak included in our 2020 10-K, filed
with the SEC on March 4, 2021. Capitalized terms used and not defined herein
have the meanings disclosed elsewhere in the Quarterly Report on Form 10-Q.

The following discussion contains forward-looking statements that reflect future
plans, estimates, beliefs and expected performance. The forward-looking
statements are dependent upon events, risks and uncertainties that may be
outside of the Company's control. The Company's actual results could differ
materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those identified below and those discussed in the sections titled "Risk
Factors" and "Cautionary Note Regarding Forward-Looking Statements" included
elsewhere in this Quarterly Report on Form 10-Q.

Overview


Ranpak is a leading provider of environmentally sustainable, systems-based,
product protection solutions for e-commerce and industrial supply chains. Since
inception in 1972, we have delivered high quality protective packaging
solutions, while maintaining commitment to environmental sustainability. We
assemble our protective packaging systems and provide the systems and paper
consumables to customers, which include direct end-users and our network of
exclusive paper packaging solution distributors, who in turn place the systems
with and sell paper to commercial and industrial users for the conversion of
paper into packaging materials. We operate manufacturing facilities in Concord
Township, Ohio; Kansas City, Missouri; Raleigh, North Carolina; and Reno, Nevada
in the United States, in Heerlen, the Netherlands and Nyrany, Czech Republic. We
have a dedicated Ranpak Automation facility in Kerkrade, the Netherlands and an
automation research and development facility in Christiansburg, Virginia. We
also maintain sales and administrative offices in Sao Paulo, Brazil; Shanghai,
China; Laoshan, China; Paris, France; Tokyo, Japan; and Singapore. We are a
global business that generated approximately 61.0% of our net revenue for the
fiscal year 2020 outside of the United States.

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As of September 30, 2021, we had an installed base of approximately 129.2
thousand protective packaging systems serving a diverse set of distributors and
end-users. We generated net revenue of $274.8 million and $206.3 million in the
nine months ended September 30, 2021 and 2020, respectively.

Effect of Currency Fluctuations. As a result of the geographic diversity of our
operations, we are exposed to the effects of currency translation. Currency
transaction exposure results when we generate revenue in one currency at one
time and incur expenses in another currency at another time, or when we realize
gain or loss on intercompany transfers. While we seek to limit currency
transaction exposure by matching the currencies in which we incur revenue and
expenses, we may not always be able to do so.

In addition, we are subject to currency translation exposure because the
operations of our subsidiaries are measured in their functional currency which
is the currency of the primary economic environment in which the subsidiary
operates. Any currency balances that are denominated in currencies other than
the functional currency of the subsidiary are re-measured into the functional
currency, with the resulting gain or loss recorded in the foreign currency
(gain) losses line-item in our condensed consolidated statements of income
(loss). In turn, subsidiary income statement balances that are denominated in
currencies other than the USD are translated into USD, our functional currency,
in consolidation using the average exchange rate in effect during each fiscal
month during the period, with any related gain or loss recorded as foreign
currency translation adjustments in other comprehensive income (loss). The
assets and liabilities of subsidiaries that use functional currencies other than
the USD are translated into USD in consolidation using period end exchange
rates, with the effects of foreign currency translation adjustments included in
accumulated other comprehensive income (loss).

Beginning in September 2021, we hedge some of our exposure to foreign currency
translation with a cross currency swap. However, significant currency
fluctuations could impact the comparability of results between periods, while
such fluctuations coupled with material mismatches in net revenue and expenses
could also adversely impact our cash flows. See "Qualitative and Quantitative
Disclosures About Market Risk."

Seasonality. Approximately 34.9% of our net revenue in 2020, either directly or
to distributors, was destined for end-users in the e-commerce sectors, whose
businesses frequently follow traditional retail seasonal trends, including a
concentration of sales in the holiday period in the fourth quarter. Our results
tend to follow similar patterns, with the highest net revenue typically recorded
in the fourth fiscal quarter and the slowest sales in the first fiscal quarter
of each fiscal year. We expect this seasonality to continue in the future, as a
result of which our results of operations between fiscal quarters in a given
year may not be directly comparable.

Impact of the COVID-19 Pandemic. The COVID-19 pandemic has resulted in rapid
changes in market and economic conditions around the world as COVID-19 continues
to spread. We derive a significant portion of our revenue from sales of
Void-Fill, Cushioning and Wrapping solutions to e-commerce end-users and demand
from these end-users has been strong, offsetting reductions in demand for these
products from customers in other industries. However, social distancing and
similar measures adopted in many jurisdictions around the world have impacted
our ability to demonstrate and install our protective packaging systems and
Automation products and, as a result, such demonstrations and installations have
been delayed. If social distancing measures continue for an extended period of
time, growth in our protective packaging system base, acquisition of new
customers and sales of Automation products may be adversely affected. We believe
that these impacts are not unique to us and that our industry competitors have
been impacted in a similar fashion. We are deemed an essential business under
the Memorandum on Identification of Essential Critical Infrastructure Workers
During COVID-19 Response issued by the United States Cybersecurity and
Infrastructure Security Agency and pursuant to state decisions in states where
our domestic production and distribution facilities are located. We continue to
operate our production and distribution facilities, both domestically and
internationally, albeit subject to social distancing and other measures to
promote a safe operating environment. While we have experienced limited delays
in receiving certain supplies we use to assemble our packaging systems, to date,
these measures have not materially impacted the cost of producing and
distributing our products, the cost and availability of raw materials and
components, and we have encountered minimal disruption in our ability to fulfill
customer orders. We continue to monitor our liquidity position closely and have
extended payment terms to certain of our customers when necessary, while
correspondingly seeking extended terms from our key suppliers. While we do not
currently expect COVID-19 to have a material impact on our business, results of
operations, financial condition or liquidity, at the time of this filing, we
cannot predict the extent to which we will ultimately be impacted due to the
evolving and highly uncertain nature and duration of the COVID-19 pandemic. See
"Risk Factors" in the 2020 10-K. We will continue to evaluate the nature and
extent of the impact to our business, results of operations, financial
condition, and cash flows.

Key Performance Indicators and Other Factors Affecting Performance


We use the following key performance indicators and monitor the following other
factors to analyze business performance, determine financial forecasts, and help
develop long-term strategic plans.

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Protective Packaging Systems Base - We closely track the number of protective
packaging systems installed with end-users as it is a leading indicator of
underlying business trends and near-term and ongoing net sales expectations. Our
installed base of protective packaging systems also drives our capital
expenditure budgets. The following table presents our installed base of
protective packaging systems by product line as of September 30, 2021 and 2020:



                      September 30, 2021      September 30, 2020          Change             % Change
Protective
Packaging Systems                             (in thousands)
Cushioning machines                  34.9                    33.2                 1.7                 5.1
Void-fill machines                   75.1                    65.5                 9.6                14.7
Wrapping machines                    19.2                    14.4                 4.8                33.3
Total                               129.2                   113.1                16.1                14.2




Paper Costs. Paper is a key component of our cost of goods sold and paper costs
can fluctuate significantly between periods. We purchase both 100% virgin and
100% recycled paper, as well as blends, from various suppliers for conversion
into the paper consumables we sell. The cost of paper supplies is our largest
input cost, and we negotiate supply and pricing arrangements with most of our
paper suppliers annually, with a view towards mitigating fluctuations in paper
cost. Nevertheless, as paper is a commodity, its price on the open market, and
in turn the prices we negotiate with suppliers at a given point in time, can
fluctuate significantly, and is affected by several factors outside of our
control, including supply and demand and the cost of other commodities that are
used in the manufacture of paper, including wood, energy and chemicals. The
market for our solutions is competitive and it may be difficult to pass on
increases in paper prices to our customers immediately, or at all, which has in
the past, and could in the future, adversely affect our operating results. In
recent months, the cost of paper has increased, though we have not experienced
the full impact of the increases to date because of existing purchase
arrangements. However, as we renegotiate our paper purchase arrangements in the
ordinary course over the coming months, we expect our cost of goods sold to
increase. Energy costs, particularly in Europe, and freight costs are also
increasing, which we expect will further impact our cost of goods sold. Where we
can, we will look to pass these increased market costs on to our customers to
mitigate the impact of these costs. We are unable to predict how much of these
increases that we will be able to pass on to our customers and our ability to
pass these costs on to our customers. As such, we expect some pressure on our
gross margin.

Results of Operations

The following tables set forth our results of operations for the three and nine
months ended September 30, 2021 and 2020 with line items presented in millions
of dollars.

Our condensed consolidated financial statements are prepared in accordance with
GAAP. We have, however, also presented below Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA") and adjusted EBITDA ("AEBITDA"), each
on a constant currency basis, which are non-GAAP financial measures. We have
included EBITDA and AEBITDA on a constant currency basis because they are key
measures used by our management and Board of Directors to understand and
evaluate our operating performance and trends, to prepare and approve our annual
budget and to develop short- and long-term operational plans. In particular, the
exclusion of certain expenses in calculating EBITDA and AEBITDA can provide a
useful measure for period-to-period comparisons of our primary business
operations. Adjusting these non-GAAP measures for comparability for constant
currency also assists in this comparison as allows a better insight into the
performance of our businesses that operate in currencies other than our
reporting currency. Before consolidation, our Europe/Asia data is derived in
Euros. We multiply this Euro-derived data by 1.15 to reflect an exchange rate of
1 Euro to 1.15 USD, which we believe is a reasonable figure to use to give a
stable depiction of the business without currency fluctuations, to calculate
Europe/Asia data in constant currency USD. We combine the constant currency USD
data for Europe/Asia with the USD North America data to create combined constant
currency figures and adjust our non-GAAP figures by the respective amounts. In
sum, we believe that constant currency EBITDA and AEBITDA provide useful
information to investors and others in understanding and evaluating the
Company's operating results in the same manner as our management and Board of
Directors.

However, EBITDA and AEBITDA have limitations as analytical tools, and you should
not consider them in isolation or as substitutes for analysis of our results as
reported under GAAP. In particular, EBITDA and AEBITDA should not be viewed as
substitutes for, or superior to, net income (loss) prepared in accordance with
GAAP as a measure of profitability or liquidity. Some of these limitations are:

?
although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized may have to be replaced in the future, and EBITDA and
AEBITDA do not reflect all cash capital expenditure requirements for such
replacements or for new capital expenditure requirements;
?
EBITDA and AEBITDA do not reflect changes in, or cash requirements for, our
working capital needs;

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?
AEBITDA does not consider the potentially dilutive impact of equity-based
compensation;
?
EBITDA and AEBITDA do not reflect the impact of the recording or release of
valuation allowances or tax payments that may represent a reduction in cash
available to us;
?
AEBITDA does not take into account any restructuring and integration costs; and
?
other companies, including companies in our industry, may calculate EBITDA and
AEBITDA differently, which reduces their usefulness as comparative measures.

EBITDA - EBITDA is a non-GAAP financial measure that we present on a constant
currency basis and calculate as net income (loss), adjusted to exclude: benefit
from (provision for) income taxes; interest expense; and depreciation and
amortization.

AEBITDA - AEBITDA is a non-GAAP financial measure that we present on a constant
currency basis and calculate as net income (loss), adjusted to exclude: benefit
from (provision for) income taxes; interest expense; depreciation and
amortization; stock-based compensation expense; and, in certain periods, certain
other income and expense items.

In addition, in our discussion below, we include certain other unaudited,
non-GAAP constant currency data for the three and nine months ended September
30, 2021 and 2020. This data is based on our historical financial statements
included elsewhere in this Quarterly Report on Form 10-Q, adjusted (where
applicable) to reflect a constant currency presentation between periods for the
convenience of readers. We reconcile this data to our GAAP data for the same
period under "Presentation and Reconciliation of GAAP to Non-GAAP Measures" for
the three and three and nine months ended September 30, 2021 and 2020 .

Comparison of Three Months Ended September 30, 2021 to Three Months Ended
September 30, 2020



                                                Three Months Ended September 30,
                                2021             % Net revenue          2020           % Net revenue
Net revenue                 $        97.1                     -     $        76.8                   -
Cost of goods sold                   59.1                  60.9              46.6                60.7
Gross profit                         38.0                  39.1              30.2                39.3
Selling, general and
administrative expenses              27.1                  27.9              16.6                21.6
Transaction costs                       -                     -               1.2                 1.6
Depreciation and
amortization expense                  8.7                   9.0               7.7                10.0
Other operating expense
(income), net                        (0.1 )                (0.1 )             1.9                 2.5
Income from operations                2.3                   2.4               2.8                 3.6
Interest expense                      5.5                   5.7               4.9                 6.4
Foreign currency (gain)
loss                                 (1.5 )                (1.5 )             3.2                 4.2
Loss before income tax
benefit                              (1.7 )                (1.8 )            (5.3 )              (6.9 )
Income tax expense
(benefit)                            (0.3 )                (0.3 )             0.8                 1.0
Net loss                    $        (1.4 )                (1.4 )   $        (6.1 )              (7.9 )

Non-GAAP Constant
Currency
EBITDA                      $        22.1$        15.2
AEBITDA                     $        28.5$        23.7


Net Revenue

The following tables and the discussion that follows compare Ranpak's net
revenue by geographic region and by product line for the third quarter of 2021
and 2020 on a GAAP basis and on a non-GAAP constant currency basis as described
above and in the discussion below. See also "Presentation and Reconciliation of
GAAP to Non-GAAP Measures" for further:



                                    Three Months Ended September 30,
                        2021          % Net revenue       2020       % Net revenue
North America         $   37.3                  38.4     $ 33.3                43.4
Europe/Asia               59.8                  61.6       43.5                56.6
Net revenue           $   97.1                 100.0     $ 76.8               100.0

Cushioning machines   $   40.9                  42.1     $ 31.8                41.4
Void-fill machines        39.5                  40.7       33.3                43.4
Wrapping machines         12.6                  13.0       10.1                13.2
Other                      4.1                   4.2        1.6                 2.0
Net revenue           $   97.1                 100.0     $ 76.8               100.0




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                                                       Non-GAAP Constant Currency
                                                    Three Months Ended September 30,
                        2021         % Net revenue        2020         % Net revenue       $ Change       % Change
North America         $    37.3                39.0     $    33.3                43.8     $      4.0           12.0
Europe/Asia                58.3                61.0          42.8                56.2           15.5           36.2
Net revenue           $    95.6               100.0     $    76.1               100.0     $     19.5           25.6

Cushioning machines   $    40.2                42.1     $    31.4                41.3     $      8.8           28.0
Void-fill machines         39.1                40.9          33.0                43.4            6.1           18.5
Wrapping machines          12.5                13.1          10.1                13.3            2.4           23.8
Other                       3.8                 3.9           1.6                 2.0            2.2          137.5
Net revenue           $    95.6               100.0     $    76.1               100.0     $     19.5           25.6




Net revenue for the third quarter of 2021 was $97.1 million compared to net
revenue of $76.8 million in the third quarter of 2020, an increase of $20.3
million or 26.4% year over year. Net revenue was positively impacted by
increases in cushioning, void-fill, wrapping, and other sales. Cushioning
increased $9.1 million, or 28.6%, to $40.9 million from $31.8 million; void-fill
increased $6.2 million, or 18.6%, to $39.5 million from $33.3 million; wrapping
increased $2.5 million, or 24.8%, to $12.6 million from $10.1 million; and other
sales increased $2.5 million, or 156.3%, to $4.1 million from $1.6 million, for
the third quarter of 2021 compared to the third quarter of 2020. Other net
revenue includes automated box sizing equipment and non-paper revenue from
packaging systems installed in the field. Constant currency net revenue was
$95.6 million for the third quarter of 2021, a $19.5 million, or 25.6%, increase
from constant currency net revenue of $76.1 million for the third quarter of
2020. The increase in net revenue was primarily a result of an increase in the
volume of our paper consumable products of approximately 16.7 percentage points
("pp"), a 5.9 pp increase in the price or mix of our paper consumable products,
and an increase of 3.0 pp in sales of automated box sizing equipment.

Net revenue in North America for the third quarter of 2021 totaled $37.3 million
compared to net revenue in North America of $33.3 million in the third quarter
of 2020. The increase of $4.0 million, or 12.0%, was attributable to an increase
in cushioning, void-fill, wrapping, and other sales.

Net revenue in Europe/Asia for the third quarter of 2021 totaled $59.8 million
compared to net revenue in Europe/Asia of $43.5 million in the third quarter of
2020. The increase of $16.3 million, or 37.5%, was driven primarily by increases
in cushioning, void-fill and wrapping product categories, partially offset by a
decline in automation revenue. Constant currency net revenue in Europe/Asia was
$58.3 million for the third quarter of 2021, a $15.5 million, or 36.2%, increase
from constant currency net revenue of $42.8 million for the third quarter of
2020.

Cost of Goods Sold

Cost of goods sold for the third quarter of 2021 totaled $59.1 million, an
increase of $12.5 million, or 26.8%, compared to $46.6 million in the third
quarter of 2020. The change was due to higher volumes associated with higher
paper sales, as well as increased paper and freight costs, and an increase in
depreciation of $1.8 million over the prior year. Constant currency cost of
goods sold increased by $12.0 million, or 26.0%, to $58.2 million in the third
quarter of 2021 from $46.2 million for the third quarter of 2020. As a result,
on a constant currency basis, net revenue minus cost of goods sold as a
percentage of net revenue decreased by 0.2 pp to 39.1% in the third quarter of
2021 from 39.3% for the third quarter of 2020.

Selling, General and Administrative Expenses ("SG&A")


SG&A expenses for the third quarter of 2021 was $27.1 million, an increase of
$10.5 million, or 63.3%, from $16.6 million in the third quarter of 2020.
Constant currency SG&A expenses increased by $10.3 million, or 62.4%, to $26.8
million in the third quarter of 2021 from $16.5 million for the third quarter of
2020, largely due to increases in stock compensation expense from the 2021 LTIP
PRSUs, as well as increased growth headcount and associated compensation. As a
percentage of constant currency net revenue, constant currency SG&A increased to
28.0% in the third quarter of 2021 from 21.7% in the third quarter of 2020.

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Depreciation and Amortization


Depreciation and amortization expenses for the third quarter of 2021 were $8.7
million, an increase of $1.0 million, or 13.0%, from $7.7 million in the third
quarter of 2020 due to an increase in capital expenditures. Constant currency
depreciation and amortization expenses were not impacted by constant currency
adjustments in the third quarter of 2021 or the third quarter of 2020. As a
percentage of constant currency net revenue, constant currency depreciation and
amortization expenses decreased to 9.1% in the third quarter of 2021 from 10.1%
in the third quarter of 2020.

Other Operating Expense (Income), Net


Other operating income, net for the third quarter of 2021 was $0.1 million, a
change of $2.0 million, or 105.3%, from expense of $1.9 million in the third
quarter of 2020. Constant currency other operating expense, net, was not
impacted by constant currency adjustments in the third quarter of 2021. However,
constant currency other operating expense, net was $1.8 million in the third
quarter of 2020. The change in other operating expense (income), net was largely
driven by capitalization of certain research and development costs in the third
quarter of 2021. As a percentage of constant currency net revenue, constant
currency other operating expense, net, decreased to 0.1% in the third quarter of
2021 from 2.4% in the third quarter of 2020.

Interest Expense


Interest expense for the third quarter of 2021 was $5.5 million, an increase of
$0.6 million, or 12.2%, from $4.9 million in the third quarter of 2020. Although
debt levels decreased in the third quarter of 2021 compared to the third quarter
of 2020, interest expense in the third quarter of 2021 increased due to higher
foreign currency exchange rates compared to the third quarter of 2020.
Additionally, interest expense in the third quarter of 2020 was reduced by
one-time non-cash adjustments related to our interest rate swap agreements.
Constant currency interest expense was not impacted by constant currency
adjustments in the third quarter of 2021 or the third quarter of 2020. As a
percentage of constant currency net revenue, constant currency interest expense
decreased to 5.8% in the third quarter of 2021 from 6.4% in the third quarter of
2020.

Foreign Currency (Gain) Loss


Foreign currency gain for the third quarter of 2021 was $1.5 million, a change
of $4.7 million, or 146.9%, from foreign currency loss of $3.2 million in the
third quarter of 2020 due to favorable movements in Euro exchange rates.
Constant currency foreign currency gain was $1.8 million in the third quarter of
2021. Constant currency foreign currency loss was not impacted by constant
currency adjustments in the third quarter of 2020. As a percentage of constant
currency net revenue, constant currency foreign currency gain decreased to 1.9%
in the third quarter of 2021 from 4.2% in the third quarter of 2020.

Income Tax Benefit


Income tax benefit for the third quarter of 2021 was $0.3 million, or an
effective tax rate of 16.1%. Income tax expense was $0.8 million in the third
quarter of 2020, or an effective tax rate of negative 15.7%. The fluctuation in
the effective tax rate between periods was primarily attributable to a
jurisdictional mix of income. The effective tax rate differs from the U.S.
federal statutory rate due primarily to benefits derived from stock-based
compensation, return to provision adjustments, and the U.S. foreign derived
intangible income deduction, tax credits available in the U.S., and income in
foreign jurisdictions that are taxed at different rates than the U.S. statutory
tax rate.

Net Loss

Net loss for the third quarter of 2021 decreased $4.7 million to $1.4 million
from a net loss of $6.1 million in the third quarter of 2020. Constant currency
net loss was $1.4 million in the third quarter of 2021 compared to constant
currency net loss of $6.2 million for the third quarter of 2020. The change was
due to the reasons discussed above.

Constant Currency EBITDA and AEBITDA


EBITDA for the third quarter of 2021 was $22.1 million, an increase of $6.9
million, or 45.4%, compared to $15.2 million in the third quarter of 2020.
Adjusting for one-time costs, constant currency AEBITDA for the third quarter of
2021 and 2020 totaled $28.5 million and $23.7 million, respectively, an increase
of $4.8 million, or 20.3%.

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Comparison of Nine Months Ended September 30, 2021 to Nine Months Ended
September 30, 2020



                                                Nine Months Ended September 30,
                                2021            % Net revenue          2020           % Net revenue
Net revenue                 $       274.8                    -     $       206.3            -
Cost of goods sold                  164.8                 60.0             122.3                59.3
Gross profit                        110.0                 40.0              84.0                40.7
Selling, general and
administrative expenses              70.8                 25.8              56.9                27.6
Transaction costs                       -                    -               1.2                 0.6
Depreciation and
amortization expense                 26.1                  9.5              22.9                11.1
Other operating expense,
net                                   2.0                  0.7               2.9                 1.4
Income from operations               11.1                  4.0               0.1                 0.0
Interest expense                     17.1                  6.2              16.6                 8.0
Foreign currency (gain)
loss                                 (3.9 )               (1.4 )             3.1                 1.5
Loss before income tax
benefit                              (2.1 )               (0.8 )           (19.6 )              (9.5 )
Income tax benefit                   (1.8 )               (0.7 )            (1.4 )              (0.7 )
Net loss                    $        (0.3 )               (0.1 )   $       (18.2 )              (8.8 )

Non-GAAP Constant
Currency
EBITDA                      $        68.2$        42.2
AEBITDA                     $        82.1$        60.8


Net Revenue

The following tables and the discussion that follows compare Ranpak's net
revenue by geographic region and by product line for the nine months ended
September 30, 2021 and 2020 on a GAAP basis and on a non-GAAP constant currency
basis as described above and in the discussion below. See also "Presentation and
Reconciliation of GAAP to Non-GAAP Measures" for further:



                                    Nine Months Ended September 30,
                        2021        % Net revenue       2020        % Net revenue
North America         $  101.1                36.8     $  88.6                42.9
Europe/Asia              173.7                63.2       117.7                57.1
Net revenue           $  274.8               100.0     $ 206.3               100.0

Cushioning machines   $  118.9                43.3     $  86.1                41.7
Void-fill machines       109.3                39.8        86.8                42.1
Wrapping machines         36.3                13.2        25.9                12.6
Other                     10.3                 3.7         7.5                 3.6
Net revenue           $  274.8               100.0     $ 206.3               100.0




                                                       Non-GAAP Constant Currency
                                                     Nine Months Ended September 30,
                        2021         % Net revenue        2020         % Net revenue       $ Change       % Change
North America         $   101.1                37.7     $    88.6                42.5     $     12.5           14.1
Europe/Asia               167.0                62.3         120.1                57.5           46.9           39.1
Net revenue           $   268.1               100.0     $   208.7               100.0     $     59.4           28.5

Cushioning machines   $   115.5                43.1     $    87.3                41.8     $     28.2           32.3
Void-fill machines        107.0                39.9          87.5                41.9           19.5           22.3
Wrapping machines          35.7                13.3          26.1                12.5            9.6           36.8
Other                       9.9                 3.7           7.8                 3.8            2.1           26.9
Net revenue           $   268.1               100.0     $   208.7               100.0     $     59.4           28.5




                                       31
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Net revenue for the nine months ended September 30, 2021 was $274.8 million
compared to net revenue of $206.3 million in the nine months ended September 30,
2020, an increase of $68.5 million or 33.2%. Net revenue was positively impacted
by increases in cushioning, void-fill, wrapping, and other sales. Cushioning
increased $32.8 million, or 38.1%, to $118.9 million from $86.1 million;
void-fill increased $22.5 million, or 25.9%, to $109.3 million from $86.8
million; wrapping increased $10.4 million, or 40.2%, to $36.3 million from $25.9
million; and other sales increased $2.8 million, or 37.3%, to $10.3 million from
$7.5 million, for the nine months ended September 30, 2021 compared to the nine
months ended September 30, 2020. Other net revenue includes automated box sizing
equipment and non-paper revenue from packaging systems installed in the field.
Constant currency net revenue was $268.1 million for the nine months ended
September 30, 2021, a $59.4 million, or 28.5%, increase from constant currency
net revenue of $208.7 million for the nine months ended September 30, 2020. The
increase in net revenue was a result of an increase in the volume of our paper
consumable products of approximately 28.4 pp and a 0.9 pp increase in the sales
of automated box sizing equipment, partially offset by a 0.9 pp decrease in the
price or mix of our paper consumable products.

Net revenue in North America for the nine months ended September 30, 2021
totaled $101.1 million compared to net revenue in North America of $88.6 million
in the nine months ended September 30, 2020. The increase of $12.5 million, or
14.1%, was attributable to an increase in cushioning, void-fill, wrapping; and
other sales.

Net revenue in Europe/Asia for the nine months ended September 30, 2021 totaled
$173.7 million compared to net revenue in Europe/Asia of $117.7 million in the
nine months ended September 30, 2020. The increase of $56.0 million, or 47.6%,
was driven primarily by increases in cushioning, void-fill and wrapping product
categories, partially offset by a decline in automation revenue. Constant
currency net revenue in Europe/Asia was $167.0 million for the nine months ended
September 30, 2021, a $46.9 million, or 39.1%, increase from constant currency
net revenue of $120.1 million for the nine months ended September 30, 2020.

Cost of Goods Sold


Cost of goods sold for the nine months ended September 30, 2021 totaled $164.8
million, an increase of $42.5 million, or 34.8%, compared to $122.3 million in
the nine months ended September 30, 2020. The change was due to higher volumes
associated with higher paper sales, as well as increased paper and freight
costs, and an increase in depreciation of $5.9 million over the prior year.
Constant currency cost of goods sold increased by $37.2 million, or 30.1%, to
$160.9 million in the nine months ended September 30, 2021 from $123.7 million
for the nine months ended September 30, 2020. As a result, on a constant
currency basis, net revenue minus cost of goods sold as a percentage of net
revenue decreased by 0.7 pp to 40.0% in the nine months ended September 30, 2021
from 40.7% for the comparable period in 2020.

SG&A


SG&A expenses for the nine months ended September 30, 2021 was $70.8 million, an
increase of $13.9 million, or 24.4%, from $56.9 million in the nine months ended
September 30, 2020. Constant currency SG&A expenses increased by $12.1 million,
or 21.0%, to $69.6 million in the nine months ended September 30, 2021 from
$57.5 million for the comparable period in 2020, largely due to increases in
stock compensation expense from the 2021 LTIP PRSUs, as well as increased growth
headcount and associated compensation. As a percentage of constant currency net
revenue, constant currency SG&A decreased to 26.0% in the nine months ended
September 30, 2021 from 27.6% in the nine months ended September 30, 2020.

Depreciation and Amortization


Depreciation and amortization expenses for the nine months ended September 30,
2021 were $26.1 million, an increase of $3.2 million, or 14.0%, from $22.9
million in the nine months ended September 30, 2020 due to an increase in
capital expenditures. Constant currency depreciation and amortization expenses
increased by $2.7 million, or 11.7%, to $25.8 million in the nine months ended
September 30, 2021 from $23.1 million for the nine months ended September 30,
2020. As a percentage of constant currency net revenue, constant currency
depreciation and amortization expenses decreased to 9.6% in the nine months
ended September 30, 2021 from 11.1% in the nine months ended September 30, 2020.

Other Operating Expense, Net


Other operating expense, net, for the nine months ended September 30, 2021 was
$2.0 million, a decrease of $0.9 million, or 31.0%, from $2.9 million in the
nine months ended September 30, 2020. Constant currency other operating expense,
net, was not impacted by constant currency adjustments in the nine months ended
September 30, 2021. However, constant currency other operating expense, net was
$3.2 million in the nine months ended September 30, 2020. The change in other
operating expense, net was largely driven by capitalization of certain research
and development costs in the nine months ended September 30, 2021. As a
percentage of constant currency net revenue, constant currency other operating
expense, net, decreased to 0.7% in the nine months ended September 30, 2021 from
1.5% in the nine months ended September 30, 2020.

                                       32

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Interest Expense


Interest expense for the nine months ended September 30, 2021 was $17.1 million,
an increase of $0.5 million, or 3.0%, from $16.6 million in the nine months
ended September 30, 2020. Although debt levels decreased in the nine months
ended September 30, 2021 compared to the nine months ended September 30, 2020,
interest expense in the nine months ended September 30, 2021 increased due to
higher foreign currency exchange rates compared to the nine months ended
September 30, 2020, as well as accelerated amortization of approximately $0.3
million of deferred financing costs in the June 2021 Prepayment. Additionally,
interest expense in the nine months ended September 30, 2020 was reduced by
one-time non-cash adjustments related to our interest rate swap agreements. The
Exit Payment, which was accrued in 2020, was paid in the first quarter of 2021.
Constant currency interest expense was $17.0 million in the nine months ended
September 30, 2021. Constant currency interest expense was not impacted by
constant currency adjustments in the nine months ended September 30, 2020. As a
percentage of constant currency net revenue, constant currency interest expense
decreased to 6.3% in the nine months ended September 30, 2021 from 8.0% in the
nine months ended September 30, 2020.

Foreign Currency (Gain) Loss


Foreign currency gain for the nine months ended September 30, 2021 was $3.9
million, a change of $7.0 million, or 225.8%, from foreign currency loss of $3.1
million in the nine months ended September 30, 2020 due to favorable movements
in Euro exchange rates. Constant currency foreign currency gain was $4.9 million
in the nine months ended September 30, 2021. Constant currency foreign currency
loss was not impacted by constant currency adjustments in the nine months ended
September 30, 2020. As a percentage of constant currency net revenue, constant
currency foreign currency gain increased to 1.8% in the nine months ended
September 30, 2021 from 1.5% in the nine months ended September 30, 2020.

Income Tax Benefit


Income tax benefit for the nine months ended September 30, 2021 was $1.8
million, or an effective tax rate of 89.1%. Income tax benefit was $1.4 million
in the nine months ended September 30, 2020, or an effective tax rate of 7.1%.
The fluctuation in the effective tax rate between periods was primarily
attributable to a jurisdictional mix of income. The effective tax rate differs
from the U.S. federal statutory rate due primarily to benefits derived from
stock-based compensation, return to provision adjustments, and the U.S. foreign
derived intangible income deduction, tax credits available in the U.S., and
income in foreign jurisdictions that are taxed at different rates than the U.S.
statutory tax rate.

Net Loss

Net loss for the nine months ended September 30, 2021 decreased $17.9 million to
$0.3 million from a net loss of $18.2 million in the nine months ended September
30, 2020. Constant currency net loss was $0.4 million in the nine months ended
September 30, 2021 compared to constant currency net loss of $18.4 million for
the nine months ended September 30, 2020. The change was due to the reasons
discussed above.

Constant Currency EBITDA and AEBITDA

EBITDA for the nine months ended September 30, 2021 was $68.2 million, an increase of $26.0 million, or 61.6%%, from $42.2 million in the nine months ended September 30, 2020. Adjusting for one-time costs, constant currency AEBITDA for the nine months ended September 30, 2021 and 2020 totaled $82.1 million and $60.8 million, respectively, an increase of $21.3 million, or 35.0%.

Presentation and Reconciliation of GAAP to Non-GAAP Measures


As noted above, we believe that in order to better understand the performance of
the Company, providing non-GAAP financial measures to users of our financial
information is helpful. We believe presentation of these non-GAAP measures is
useful because they are many of the key measures that allow management to
evaluate more effectively our operating performance and compare the results of
our operations from period to period and against peers without regard to
financing methods or capital structure. Management does not consider these
non-GAAP measures in isolation or as an alternative to similar financial
measures determined in accordance with GAAP. The computations of EBITDA and
AEBITDA may not be comparable to other similarly titled measures of other
companies. These non-GAAP financial measures should not be considered as
alternatives to, or more meaningful than, measures of financial performance as
determined in accordance with GAAP or as indicators of operating performance.

The following tables and related notes reconcile certain non-GAAP measures, including the non-GAAP constant currency measures, to GAAP information presented in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2021 and 2020:

                                       33

--------------------------------------------------------------------------------



                                                  Three Months Ended September 30, 2021
                                     As reported          Constant Currency(3)            Non-GAAP
Net revenue                        $           97.1       $                (1.5 )     $           95.6
Cost of goods sold                             59.1                        (0.9 )                 58.2
Gross profit                                   38.0                        (0.6 )                 37.4
Selling, general and
administrative expenses                        27.1                        (0.3 )                 26.8
Depreciation and amortization
expense                                         8.7                           -                    8.7
Other operating income, net                    (0.1 )                         -                   (0.1 )
Income from operations                          2.3                        (0.3 )                  2.0
Interest expense                                5.5                           -                    5.5
Foreign currency gain                          (1.5 )                      (0.3 )                 (1.8 )
Loss before income tax benefit                 (1.7 )                         -                   (1.7 )
Income tax benefit                             (0.3 )                         -                   (0.3 )
Net loss                           $           (1.4 )     $                   -                   (1.4 )

Constant currency-effected
add(1):
Depreciation and amortization
expense - COS                                                                                      9.6
Depreciation and amortization
expense - D&A                                                                                      8.7
Interest expense                                                                                   5.5
Income tax benefit                                                                                (0.3 )
Constant currency EBITDA                                                                          22.1

Constant currency-effected
adjustments(2):
Unrealized gain translation                                                                       (1.5 )
Non-cash impairment losses                                                                         0.3
M&A, restructuring, severance                                                                      0.1
Amortization of restricted stock
units                                                                                              6.9
Other non-core and non-cash
adjustments                                                                                        0.6
Constant currency AEBITDA                                                             $           28.5




                                                  Three Months Ended September 30, 2020
                                     As reported          Constant Currency(3)            Non-GAAP
Net revenue                        $           76.8       $                (0.7 )     $           76.1
Cost of goods sold                             46.6                        (0.4 )                 46.2
Gross profit                                   30.2                        (0.3 )                 29.9
Selling, general and
administrative expenses                        16.6                        (0.1 )                 16.5
Transaction costs                               1.2                           -                    1.2
Depreciation and amortization
expense                                         7.7                           -                    7.7
Other operating expense, net                    1.9                        (0.1 )                  1.8
Income from operations                          2.8                        (0.1 )                  2.7
Interest expense                                4.9                           -                    4.9
Foreign currency loss                           3.2                           -                    3.2
Loss before income tax expense                 (5.3 )                      (0.1 )                 (5.4 )
Income tax expense                              0.8                           -                    0.8
Net loss                           $           (6.1 )     $                (0.1 )                 (6.2 )

Constant currency-effected
add(1):
Depreciation and amortization
expense - COS                                                                                      8.0
Depreciation and amortization
expense - D&A                                                                                      7.7
Interest expense                                                                                   4.9
Income tax expense                                                                                 0.8
Constant currency EBITDA                                                                          15.2

Constant currency-effected
adjustments(2):
Unrealized loss translation                                                                        3.3
Constant currency                                                                                 (0.2 )
Non-cash impairment losses                                                                         0.7
M&A, restructuring, severance                                                                      1.2
Amortization of restricted stock
units                                                                                              1.7
Warrant Exchange costs                                                                             1.2
Other non-core and non-cash
adjustments                                                                                        0.6
Constant currency AEBITDA                                                             $           23.7




                                       34
--------------------------------------------------------------------------------




                                                      Non-GAAP Constant Currency
                                Three Months Ended September 30,
                                  2021                    2020             $ Change           % Change
Net revenue                  $          95.6         $          76.1     $        19.5               25.6
Cost of goods sold                      58.2                    46.2              12.0               26.0
Gross profit                            37.4                    29.9               7.5               25.1
Selling, general and
administrative expenses                 26.8                    16.5              10.3               62.4
Transaction costs                          -                     1.2              (1.2 )           (100.0 )
Depreciation and
amortization expense                     8.7                     7.7               1.0               13.0
Other operating expense
(income), net                           (0.1 )                   1.8              (1.9 )           (105.6 )
Income (loss) from
operations                               2.0                     2.7              (0.7 )            (25.9 )
Interest expense                         5.5                     4.9               0.6               12.2
Foreign currency (gain)
loss                                    (1.8 )                   3.2              (5.0 )           (156.3 )
Loss before income tax
expense (benefit)                       (1.7 )                  (5.4 )             3.7              (68.5 )
Income tax expense
(benefit)                               (0.3 )                   0.8              (1.1 )           (137.5 )
Net loss                                (1.4 )                  (6.2 )             4.8              (77.4 )

Constant currency-effected
add(1):
Depreciation and
amortization expense - COS               9.6                     8.0               1.6               20.0
Depreciation and
amortization expense - D&A               8.7                     7.7               1.0               13.0
Interest expense                         5.5                     4.9               0.6               12.2
Income tax expense
(benefit)                               (0.3 )                   0.8              (1.1 )           (137.5 )
Constant currency EBITDA                22.1                    15.2               6.9               45.4

Constant currency-effected
adjustments(2):
Unrealized (gain) loss
translation                             (1.5 )                   3.3              (4.8 )           (145.5 )
Constant currency                          -                    (0.2 )             0.2             (100.0 )
Non-cash impairment losses               0.3                     0.7              (0.4 )            (57.1 )
M&A, restructuring,
severance                                0.1                     1.2              (1.1 )            (91.7 )
Amortization of restricted
stock units                              6.9                     1.7               5.2              305.9
Warrant Exchange costs                     -                     1.2              (1.2 )           (100.0 )
Other non-core and
non-cash adjustments                     0.6                     0.6                 -                  -

Constant currency AEBITDA $ 28.5 $ 23.7 $

       4.8               20.3




                                                  Nine Months Ended September 30, 2021
                                     As reported          Constant Currency(3)            Non-GAAP
Net revenue                        $         274.8       $                 (6.7 )     $          268.1
Cost of goods sold                           164.8                         (3.9 )                160.9
Gross profit                                 110.0                         (2.8 )                107.2
Selling, general and
administrative expenses                       70.8                         (1.2 )                 69.6
Depreciation and amortization
expense                                       26.1                         (0.3 )                 25.8
Other operating expense, net                   2.0                            -                    2.0
Income from operations                        11.1                         (1.3 )                  9.8
Interest expense                              17.1                         (0.1 )                 17.0
Foreign currency gain                         (3.9 )                       (1.0 )                 (4.9 )
Loss before income tax benefit                (2.1 )                       (0.2 )                 (2.3 )
Income tax benefit                            (1.8 )                       (0.1 )                 (1.9 )
Net loss                           $          (0.3 )     $                 (0.1 )                 (0.4 )

Constant currency-effected
add(1):
Depreciation and amortization
expense - COS                                                                                     27.7
Depreciation and amortization
expense - D&A                                                                                     25.8
Interest expense                                                                                  17.0
Income tax benefit                                                                                (1.9 )
Constant currency EBITDA                                                                          68.2

Constant currency-effected
adjustments(2):
Unrealized gain translation                                                                       (4.1 )
Non-cash impairment losses                                                                         1.0
M&A, restructuring, severance                                                                      0.5
Amortization of restricted stock
units                                                                                             14.3
Other non-core and non-cash
adjustments                                                                                        2.2
Constant currency AEBITDA                                                             $           82.1




                                       35
--------------------------------------------------------------------------------




                                                  Nine Months Ended September 30, 2020
                                     As reported          Constant Currency(3)            Non-GAAP
Net revenue                        $         206.3       $                  2.4       $          208.7
Cost of goods sold                           122.3                          1.4                  123.7
Gross profit                                  84.0                          1.0                   85.0
Selling, general and
administrative expenses                       56.9                          0.6                   57.5
Transaction costs                              1.2                            -                    1.2
Depreciation and amortization
expense                                       22.9                          0.2                   23.1
Other operating expense, net                   2.9                          0.3                    3.2
Income from operations                         0.1                         (0.1 )                    -
Interest expense                              16.6                            -                   16.6
Foreign currency loss                          3.1                            -                    3.1
Loss before income tax benefit               (19.6 )                       (0.1 )                (19.7 )
Income tax benefit                            (1.4 )                        0.1                   (1.3 )
Net loss                           $         (18.2 )     $                 (0.2 )                (18.4 )

Constant currency-effected
add(1):
Depreciation and amortization
expense - COS                                                                                     22.4
Depreciation and amortization
expense - D&A                                                                                     23.0
Interest expense                                                                                  16.6
Income tax benefit                                                                                (1.4 )
Constant currency EBITDA                                                                          42.2

Constant currency-effected
adjustments(2):
Unrealized loss translation                                                                        3.1
Constant currency                                                                                  0.4
Non-cash impairment losses                                                                         1.5
M&A, restructuring, severance                                                                      4.8
Amortization of restricted stock
units                                                                                              5.9
Warrant Exchange costs                                                                             1.2
Other non-core and non-cash
adjustments                                                                                        1.7
Constant currency AEBITDA                                                             $           60.8




                                       36
--------------------------------------------------------------------------------

                                                       Non-GAAP Constant Currency
                                  Nine Months Ended September 30,
                                   2021                     2020             $ Change           % Change
Net revenue                  $          268.1         $          208.7     $        59.4               28.5
Cost of goods sold                      160.9                    123.7              37.2               30.1
Gross profit                            107.2                     85.0              22.2               26.1
Selling, general and
administrative expenses                  69.6                     57.5              12.1               21.0
Transaction costs                           -                      1.2              (1.2 )           (100.0 )
Depreciation and
amortization expense                     25.8                     23.1               2.7               11.7
Other operating expense,
net                                       2.0                      3.2              (1.2 )            (37.5 )
Income from operations                    9.8                        -               9.8                  -
Interest expense                         17.0                     16.6               0.4                2.4
Foreign currency (gain)
loss                                     (4.9 )                    3.1              (8.0 )           (258.1 )
Loss before income tax
benefit                                  (2.3 )                  (19.7 )            17.4              (88.3 )
Income tax benefit                       (1.9 )                   (1.3 )            (0.6 )             46.2
Net loss                                 (0.4 )                  (18.4 )            18.0              (97.8 )

Constant currency-effected
add(1):
Depreciation and
amortization expense - COS               27.7                     22.4               5.3               23.7
Depreciation and
amortization expense - D&A               25.8                     23.0               2.8               12.2
Interest expense                         17.0                     16.6               0.4                2.4
Income tax benefit                       (1.9 )                   (1.4 )            (0.5 )             35.7
Constant currency-effected
EBITDA                                   68.2                     42.2              26.0               61.6

Constant currency-effected
adjustments(2):
Unrealized (gain) loss
translation                              (4.1 )                    3.1              (7.2 )           (232.3 )
Constant currency                           -                      0.4              (0.4 )           (100.0 )
Non-cash impairment losses                1.0                      1.5              (0.5 )            (33.3 )
M&A, restructuring,
severance                                 0.5                      4.8              (4.3 )            (89.6 )
Amortization of restricted
stock units                              14.3                      5.9               8.4              142.4
Warrant Exchange costs                      -                      1.2              (1.2 )           (100.0 )
Other non-core and
non-cash adjustments                      2.2                      1.7               0.5               29.4
Constant currency-effected
AEBITDA                      $           82.1         $           60.8     $        21.3               35.0


(see subsequent footnotes)


(1) Reconciliations of EBITDA and AEBITDA for each period presented are to net
(loss) income, the nearest GAAP equivalent, and accordingly include the
adjustments shown in the "Constant Currency" column to net (loss) income of each
table.

(2) Adjustments are related to non-cash unusual or infrequent costs such as:
effects of non-cash foreign currency remeasurement or adjustment; impairment of
returned machines; costs associated with the evaluation of acquisitions; costs
associated with executive severance; costs associated with restructuring actions
such as plant rationalization or realignment, reorganization, and reductions in
force; and other items deemed by management to be unusual, infrequent, or
non-recurring.

(3) Effect of Euro constant currency adjustment to a rate of €1.00 to $1.15 on each line item is as follows:




                              Three Months Ended September 30,             

Nine Months Ended September 30,

                                2021                    2020                2021                    2020
Net revenue                $          (1.5 )       $          (0.7 )   $          (6.7 )       $           2.4
Cost of goods sold                    (0.9 )                  (0.4 )              (3.9 )                   1.4
Gross profit                          (0.6 )                  (0.3 )              (2.8 )                   1.0
Selling, general and
administrative expenses               (0.3 )                  (0.1 )              (1.2 )                   0.6
Depreciation and
amortization expense                     -                       -                (0.3 )                   0.2
Other operating expense,
net                                      -                    (0.1 )                 -                     0.3
Loss from operations                  (0.3 )                  (0.1 )              (1.3 )                  (0.1 )
Interest expense                         -                       -                (0.1 )                     -
Foreign currency gain                 (0.3 )                     -                (1.0 )                     -
Loss before income tax
expense (benefit)                        -                    (0.1 )              (0.2 )                  (0.1 )
Income tax expense
(benefit)                                -                       -                (0.1 )                   0.1
Net loss                   $             -         $          (0.1 )   $          (0.1 )       $          (0.2 )



Liquidity and Capital Resources


Liquidity describes the ability of a company to generate sufficient cash flows
to meet the cash requirements of its business operations, including working
capital needs, capital expenditures, debt service, acquisitions, other
commitments and contractual obligations. We evaluate liquidity in terms of cash
flows from operations and other sources and the sufficiency of such cash flows
to fund our operating, investing and financing activities.

                                       37

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We believe that our estimated cash from operations together with borrowing
capacity under the revolving portion of the Facilities will provide us with
sufficient resources to cover our current requirements. Our main liquidity needs
relate to capital expenditures and expenses for the production and maintenance
of protective packaging systems placed at end-user facilities, working capital,
including the purchase of paper raw materials, and payments of principal and
interest on our outstanding debt. We expect our capital expenditures to increase
as we continue to grow our business, expand our manufacturing footprint, and
upgrade our existing systems and facilities. To the extent that we execute
acquisitions or partnerships as part of our growth strategy, we would expect to
fund those with a combination of cash on hand, borrowings, and issuances of
equity. Our future capital requirements and the adequacy of available funds will
depend on many factors, and if we are unable to obtain needed additional funds,
we may have to reduce our operating costs or incur additional debt, which could
impair our growth prospects and/or otherwise negatively impact our business.
Further, volatility in the equity and credit markets resulting from the COVID-19
pandemic could make obtaining new equity or debt financing more difficult or
expensive.

We had $110.4 million in cash and cash equivalents as of September 30, 2021 and
$48.5 million as of December 31, 2020. We sold approximately 5.3 million shares
of Class A common stock in the May 2021 Equity Offering for net proceeds of
$103.4 million. We used $70.0 million of proceeds from the May 2021 Equity
Offering to invest in a money market fund to generate short-term cash returns.
Additionally, we prepaid $20.9 million of principal on the First Lien Dollar
Term Facility in the June 2021 Prepayment.

Including finance lease liabilities and excluding deferred financing costs, we
had $410.4 million in debt, $2.2 million of which was classified as short-term,
as of September 30, 2021, compared to $439.8 million in debt, $1.7 million of
which was classified as short-term, as of December 31, 2020. At September 30,
2021, we did not have amounts outstanding under our $45.0 million revolving
credit facility, and we had no borrowings under such facility through October
28, 2021.

Debt Profile

The material terms of the Facilities are summarized in Note 7, "Long-Term Debt"
to the condensed consolidated financial statements included elsewhere in this
Quarterly Report on Form 10-Q.

The aggregate commitment of the senior secured credit facilities consists of a
$289.2 million dollar-denominated first lien term facility and a €140.0 million
euro-denominated first lien term facility (with the ability to reduce the
dollar-denominated first lien term facility and correspondingly increase the
euro-denominated first lien term facility in an amount of up to €60.0 million),
a $45.0 million revolving facility (including the right to bring in additional
lenders to provide commitments with respect to the Revolving Facility in an
amount of up to $30.0 million and additional borrowing capacity available for
letters of credit in an amount of up to $5.0 million), a $100.0 million first
lien contingency term facility and a $100.0 million second lien contingency term
facility. Our credit facilities are secured by substantially all of Ranpak's
assets.

Each of the First Lien Term Facility, and the first lien contingency term
facility accrue interest at a rate of LIBOR plus 3.75% (assuming a first lien
net leverage ratio of less than 5.00:1.00). The second lien contingency term
facility accrues interest at a rate of LIBOR plus 7.50%. No amounts have been
drawn on under the second lien contingency. The first lien term facility and
first lien contingency term facility mature on the seventh anniversary of the
date of the closing of the Ranpak Business Combination, June 3, 2026. The
Revolving Facility matures on the fifth anniversary of the date of the Closing
June 3, 2024. The second lien contingency term facility matures on the eighth
anniversary of the date of the Closing, June 3, 2027 but was not available for
us to borrow against at September 30, 2021.

The Revolving Facility includes borrowing capacity available for letters of credit of up to $5 million. Any issuance of letters of credit will reduce the amount available under the Revolving Facility.


In addition, the debt financing provides the borrowers with the option to
increase commitments under the debt financing in an aggregate amount not to
exceed the greater of $95 million and 100% of trailing-twelve months
consolidated EBITDA, plus any voluntary prepayments of the debt financing (and,
in the case of the Revolving Facility, to the extent such voluntary prepayments
are accompanied by permanent commitment reductions under the Revolving
Facility), plus unlimited amounts subject to the relevant net leverage ratio
tests and certain other conditions.

The obligations of the borrowers under the debt financing and certain of their
respective obligations under hedging arrangements and cash management
arrangements are unconditionally guaranteed by the Guarantors, in each case,
other than certain excluded subsidiaries and subject to other customary
limitations set forth in the definitive documentation with respect to the debt
financing. The debt financing is secured by a security interest in substantially
all of the assets of the borrowers and the guarantors (and including a pledge of
the equity interests of each borrower and of each guarantor and of their
respective direct, wholly-owned restricted subsidiaries), in each case subject
to customary exceptions.

                                       38
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The Revolving Facility requires the borrowers to maintain a maximum first lien
net leverage ratio 9.10:1.00 based on the amount of the initial first lien term
loans under the debt financing actually borrowed on the closing date based on
providing at least a 35% cushion to consolidated EBITDA for the most recent four
fiscal quarter periods ending prior to the date of the closing. This "springing"
financial covenant is tested on the last day of each fiscal quarter, but only if
on such date the sum of (i) the principal amount of outstanding revolving loans
under the Revolving Facility, (ii) drawings on letters of credit under the
Revolving Facility and (iii) the face amount of non-cash collateralized letters
of credit under the Revolving Facility in excess of an amount to be set forth in
the definitive documentation with respect to the debt financing exceeds 35% of
the total revolving commitments under the Revolving Facility.

The senior secured credit facilities also contain a number of customary negative covenants. Such covenants, among other things, will limit or restrict the ability of each of the borrowers, their restricted subsidiaries, and where applicable, the direct parent holding companies of the borrowers, to:


?
incur additional indebtedness, issue disqualified stock and make guarantees;
?
incur liens on assets;
?
engage in mergers or consolidations or fundamental changes;
?
sell assets;
?
pay dividends and distributions or repurchase capital stock;
?
make investments, loans and advances, including acquisitions;
?
amend organizational documents;
?
enter into certain agreements that would restrict the ability to pay dividends;
?
repay certain junior indebtedness;
?
engage in transactions with affiliates; and
?
in the case of the direct parent holding companies of the borrowers, engage in
activities other than passively holding the equity interests in the borrowers.

The aforementioned restrictions are subject to certain exceptions including (i)
the ability to incur additional indebtedness, liens, investments, dividends and
distributions, and prepayments of junior indebtedness subject, in each case, to
compliance with certain financial metrics and certain other conditions and (ii)
a number of other traditional exceptions that grant the borrowers continued
flexibility to operate and develop their businesses. The senior secured credit
facilities also contain certain customary representations and warranties,
affirmative covenants and events of default.

Under the First Lien Term Facility agreement, our lower leverage ratio at December 31, 2020 required us to pay our lenders an $8.2 million exit payment fee (the "Exit Payment"), which was paid in the first quarter of 2021.

Amendment to First Lien Credit Facilities


On February 14, 2020, the U.S. Borrower, the Dutch Borrower, Holdings, certain
other subsidiaries of Holdings, certain lenders party to Amendment No. 1 and the
Administrative Agent entered into Amendment No. 1.

Among other things, the Amendment No. 1 amends the Facilities such that (x) the
requirement of the Borrowers to apply a percentage of excess cash flow to
mandatorily prepay term loans under the Facilities commences with the fiscal
year ending December 31, 2021 (instead of the fiscal year ending December 31,
2020) and (y) the aggregate amount per fiscal year of capital stock of any
parent company of the U.S. Borrower that is held by directors, officers,
management, employees, independent contractors or consultants of the U.S.
Borrower (or any parent company or subsidiary thereof) that the U.S. Borrower
may repurchase, redeem, retire or otherwise acquire or retire for value has been
increased to the greater of $10,000,000 and 10% of Consolidated AEBITDA (as
defined in the Facilities) (increased from the greater of $7,000,000 and 7% of
Consolidated AEBITDA) as of the last day of the most recently ended quarter for
which financial statements have been delivered.

                                       39

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Borrower Assumption Agreement


On July 1, 2020, in the following order, (i) Rack Holdings Inc. merged with and
into Ranger Packaging LLC, with Ranger Packaging LLC as the surviving entity of
such merger and (ii) Ranger Packaging LLC merged with and into Ranpak Corp.,
with Ranpak Corp. as the surviving entity of such merger (clauses (i) and (ii)
collectively, the "Reorganization"). Contemporaneously with the Reorganization,
Ranger Packaging LLC, Ranpak Corp., Ranger Pledgor LLC, certain other
subsidiaries of Ranger Pledgor LLC and Goldman Sachs Lending Partners LLC
entered into the Borrower Assumption Agreement whereby, among other things,
Ranpak Corp. assumed all obligations, liabilities and rights of Ranger Packaging
LLC as the U.S. Borrower under the Facilities.

Permitted Exit Payment


On July 28, 2021, we entered into the Permitted Exit Payment to the Credit
Agreement, which, among other things, would introduce additional exceptions to
the negative covenant that restricts the ability of the Borrowers and their
restricted subsidiaries from paying dividends and distributions or repurchasing
capital stock. On July 28, 2021, the Permitted Exit Payment Amendment to the
Credit Agreement became effective.

Cash Flows


The following table sets forth Ranpak's summary cash flow information for the
periods indicated:



                                                     Nine Months Ended September 30,
                                                     2021                       2020
Net cash provided by operating activities     $             40.8         $             37.8
Net cash used in investing activities                      (50.7 )                    (25.5 )
Net cash provided by (used in) financing
activities                                                  72.6                       (1.2 )
Effect of Exchange Rate Changes on Cash                     (0.8 )                      0.5
Net Increase in Cash and Cash Equivalents                   61.9                       11.6
Cash and Cash Equivalents, beginning of
period                                                      48.5                       19.7
Cash and Cash Equivalents, end of period      $            110.4         $             31.3



Cash Flows Provided by Operating Activities


Net cash provided by operating activities was $40.8 million in the nine months
ended September 30, 2021. Cash provided by operating activities was $37.8
million in the nine months ended September 30, 2020. The changes in operating
cash flows are largely due to cash earnings and increases in working capital.

Cash Flows Used in Investing Activities


Net cash used in investing activities was $50.7 million in the nine months ended
September 30, 2021. Cash used in investing activities was $25.5 million in the
nine months ended September 30, 2020. The changes are primarily due to cash used
for capital expenditures for converter equipment and our investments in small
private businesses.

Cash Flows Provided by (Used in) Financing Activities


Net cash provided by financing activities was $72.6 million in the nine months
ended September 30, 2021 and reflects the May 2021 Equity Offering net proceeds
of $103.4 million, offset by the June 2021 Prepayment of $20.9 million, and the
$8.2 million Exit Payment. Net cash used in financing activities was $1.2
million in the nine months ended September 30, 2020 and reflects debt
repayments.

Contractual Obligations and Other Commitments


We lease production and administrative facilities as well as automobiles,
machinery and equipment. We have various contractual obligations and commercial
commitments that are recorded as liabilities in our condensed consolidated
financial statements. Other items, such as purchase obligations and other
executory contracts, are not recognized as liabilities, but are required to be
disclosed. There have been no significant changes outside the ordinary course of
business to our "Contractual Obligations" table in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of the 2020 10-K.
Included in that table are operating lease obligations, which are now recorded
on our condensed consolidated balance sheets as a result of the adoption of ASC
842, effective January 1, 2021. See Note 12, "Leases" for further detail.

                                       40

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Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, 2021.

Critical Accounting Policies


Our unaudited condensed consolidated financial statements have been prepared in
conformity with GAAP, which requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of our financial statements and the reported amounts of revenues and
expenses during the reporting period. While we do not believe that the reported
amounts would be materially different, application of these policies involves
the exercise of judgment and the use of assumptions as to future uncertainties
and, as a result, actual results could differ from these estimates. We evaluate
our estimates and judgments on an ongoing basis. We base our estimates on
experience and various other assumptions that we believe are reasonable under
the circumstances. All of our significant accounting policies, including certain
critical accounting policies and estimates, are disclosed in our 2020 10-K.

Recently Issued and Adopted Accounting Pronouncements


For recently issued and adopted accounting pronouncements, see Note 2, "Basis of
Presentation and Summary of Significant Accounting Policies" to the unaudited
condensed consolidated financial statements included elsewhere in this Quarterly
Report on Form 10-Q.

                                       41

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